Iceland auction setback

Debt market woes are thought to have scuppered plan to offer buyers incentives – giving a management team the opportunity to take control

Upheavals in the financial markets are threatening to torpedo hopes of a full-blooded auction for the frozen-food retailer Iceland, according to insiders.

City advisers to the Icelandic banks Landsbanki and Glitnir, which control the chain, had planned to offer potential buyers ready-made financing packages tailored to give them the firepower for a bid. But the debt market’s woes are thought to have scuppered their plan, leaving Iceland’s management team in pole position to take full control of the chain.

Bank of America and UBS are handling the sale for the Icelandic banks. They still believe they can help potential bidders to find funding. An information memorandum — basically a sales brochure — is expected within two weeks.

The retailer’s management team already owns 23% of the company. Managing director Andy Pritchard has 8.1% and chief executive Malcolm Walker, who co-founded the Iceland business in 1970, holds a 5.8% stake.